Cost variances show how well the business controlled what it spent. Sales variances show how well it did at selling: were the prices achieved as planned, and were the quantities sold as planned?
When both sets are listed in a single statement that starts at budgeted profit and ends at actual profit, the board can see at a glance why the profit came out as it did, and whom to ask about each difference.
This topic covers the sales price and sales volume variances (and the quantity and mix split of volume for a multi-product firm), their causes and interrelationships, and the operating statements that reconcile budgeted and actual profit under standard absorption costing and standard marginal costing.
A single company runs through the whole topic, building on the cost variances of the last three topics, so you can see how each number arrives at the final profit. Every statement is checked against profit calculated directly from the actual figures.
In 30 seconds
Sales price variance = actual revenue − (actual units sold × standard price). Sales volume variance = (actual units − budgeted units) × standard profit per unit under absorption costing, or standard contribution per unit under marginal costing. For several products, volume splits into quantity (change in total units × weighted average standard contribution) and mix (the effect of selling a different proportion of each product).
An operating statement starts at budgeted profit, adds favourable and deducts adverse variances, and ends at actual profit. Under marginal costing the statement starts at budgeted contribution, has no fixed overhead volume variance, and shows fixed costs separately.
The company used in this topic
Ibadan Plastics Ltd makes one product, a bucket. Standard cost and budget:
| Standard cost card: one bucket | ₦ |
|---|---|
| Direct material: 2 kg @ ₦400 | 800 |
| Direct labour: 1 hour @ ₦600 | 600 |
| Variable overhead: 1 hour @ ₦200 | 200 |
| Standard marginal (variable) cost | 1,600 |
| Fixed overhead: 1 hour @ ₦300 | 300 |
| Standard full production cost | 1,900 |
| Standard profit | 600 |
| Standard selling price | 2,500 |
Standard contribution per bucket = ₦2,500 − ₦1,600 = ₦900. Budget: sell and make 10,000 buckets (10,000 hours); fixed overhead ₦3,000,000. Budgeted profit (absorption costing) = 10,000 × ₦600 = ₦6,000,000. Budgeted contribution = ₦9,000,000.
Actual: 9,200 buckets made and sold (no stock change), for revenue of ₦22,540,000 (₦2,450 each). Materials: 19,000 kg bought and used, cost ₦7,790,000. Labour: 9,500 hours paid, 9,400 worked, cost ₦5,700,000. Variable overhead ₦1,950,000. Fixed overhead ₦3,100,000.
Sales price variance
The sales price variance compares the revenue actually achieved on the units sold with the revenue that those units would have earned at the standard price. It does not matter how many units were sold, because it takes the actual units.
Sales price variance = actual revenue − (actual units sold × standard selling price).
| ₦ | |
|---|---|
| Actual revenue (9,200 × ₦2,450) | 22,540,000 |
| Standard revenue (9,200 × ₦2,500) | (23,000,000) |
| Sales price variance | 460,000 A |
Each bucket was sold ₦50 below standard: 9,200 × ₦50 = ₦460,000. The variance is favourable if units were sold above standard price and adverse if below. Sales price variances are the same under absorption and marginal costing.
Sales volume variance
The sales volume variance shows the effect on profit of selling a different number of units from the budget. It compares actual with budgeted sales volume and converts the difference into naira at the standard profit per unit under absorption costing (it is then sometimes called the sales volume profit variance).
Sales volume variance (absorption) = (actual units sold − budgeted units) × standard profit per unit.
Sales volume variance (marginal) = (actual units sold − budgeted units) × standard contribution per unit.
Absorption: (9,200 − 10,000) = 800 units A × ₦600 = ₦480,000 A. Marginal: 800 × ₦900 = ₦720,000 A. It is favourable if actual sales exceed the budget. For several products, calculate it for each and add them.
Sales variances are included in variance reports and operating statements, but they are not recorded in the cost ledger as cost variances are. They help reconcile actual profit with budgeted profit and assess sales performance.
Sales quantity and sales mix variances
When a company sells several products with different contributions, the volume variance can be split to show whether total sales were higher or lower than planned (quantity), and whether the proportions sold were different (mix).
Example. A company budgets to sell 400 of A, 300 of B and 300 of C. Standard contribution per unit: A ₦50, B ₦80, C ₦120.
- Budgeted contribution.
400 × 50 + 300 × 80 + 300 × 120 = 20,000 + 24,000 + 36,000 = ₦80,000. - The weighted average standard contribution.
₦80,000 ÷ 1,000 units = ₦80. - Actual sales: A 500, B 250, C 450 (1,200 units).
Sales quantity variance
Sales quantity variance = (actual total units − budgeted total units) × weighted average standard contribution per unit.
(1,200 − 1,000) = 200 units F × ₦80 = ₦16,000 F. In total, more units were sold than planned.
Sales mix variance
- Find the budgeted mix as percentages: A 40%, B 30%, C 30%.
- Apply these to the actual total (1,200 units) to get the units that would have been sold in the budgeted mix.
- For each product, compare actual units with this figure (difference in units). The total is zero.
- Multiply by the standard contribution per unit and add.
| Product | Actual units | Actual total in budgeted mix | Difference (units) | Std contribution | Mix variance (₦) |
|---|---|---|---|---|---|
| A (40%) | 500 | 480 | 20 F | 50 | 1,000 F |
| B (30%) | 250 | 360 | 110 A | 80 | 8,800 A |
| C (30%) | 450 | 360 | 90 F | 120 | 10,800 F |
| Total | 1,200 | 1,200 | 0 | 3,000 F |
The mix variance is favourable because more of the high-contribution product C and less of the lower-contribution product B (in relative terms) were sold. If a product is sold in smaller numbers than its share of the budgeted mix, the difference is adverse; if in larger numbers, favourable.
Check. Quantity ₦16,000 F + mix ₦3,000 F = ₦19,000 F. Actual sales at standard contribution = 500 × 50 + 250 × 80 + 450 × 120 = 25,000 + 20,000 + 54,000 = ₦99,000. Budget = ₦80,000. Difference ₦19,000 F, which is the total volume variance. ✓
| Line-by-line | ₦ | Variance |
|---|---|---|
| Actual quantity in actual mix at standard contribution | 99,000 | |
| Actual quantity in budgeted mix: 1,200 × ₦80 | 96,000 | 3,000 F mix |
| Budgeted quantity in budgeted mix: 1,000 × ₦80 | 80,000 | 16,000 F quantity |
Causes and interrelationships of sales variances
| Variance | Possible causes |
|---|---|
| Sales price | Higher or lower prices than expected owing to market conditions. Unplanned discounts to major customers. Competitors cutting prices and forcing the company to do the same |
| Sales volume | Demand higher or lower than expected. A strong or weak sales team. An advertising campaign that did better or worse than planned. A competitor leaving the market. Products going out of fashion |
Interrelationships between variances
Two variances may come from the same cause. Taken separately, one may look good and the other bad, but management should look at them together.
- Sales price and sales volume. If prices rise above standard, the price variance is favourable but demand may fall (adverse volume). If prices are cut to sell more, the price variance is adverse but the volume variance should be favourable. The net effect on profit matters. In the Ibadan example, an adverse price variance (₦460,000) came with an adverse volume variance, so the price cut did not even buy extra sales.
- Materials price and usage. Better, dearer material may give an adverse price variance and a favourable usage variance because of less wastage.
- Labour rate and efficiency. A lower grade of labour gives a favourable rate variance but may give an adverse efficiency variance, and more material waste.
- Labour efficiency and variable and fixed overhead efficiency. The same hours difference drives all three.
- Fixed overhead capacity and efficiency. More efficient work may need fewer hours than budgeted, giving a favourable efficiency variance and an adverse capacity variance, and the reverse.
The cost variances for the company
| Cost variance | Working | ₦ |
|---|---|---|
| Materials price | 19,000 × ₦400 = 7,600,000 against 7,790,000 | 190,000 A |
| Materials usage | Standard 9,200 × 2 = 18,400 kg; (18,400 − 19,000) = 600 kg × ₦400 | 240,000 A |
| Labour rate | 9,500 × ₦600 = 5,700,000 against 5,700,000 | nil |
| Labour idle time | (9,500 − 9,400) = 100 hours × ₦600 | 60,000 A |
| Labour efficiency | Standard 9,200 hours; (9,200 − 9,400) = 200 hours × ₦600 | 120,000 A |
| Variable overhead expenditure | 9,400 × ₦200 = 1,880,000 against 1,950,000 | 70,000 A |
| Variable overhead efficiency | 200 hours × ₦200 | 40,000 A |
| Fixed overhead expenditure | 3,000,000 against 3,100,000 | 100,000 A |
| Fixed overhead capacity | (9,400 − 10,000) = 600 hours × ₦300 | 180,000 A |
| Fixed overhead efficiency | (9,200 − 9,400) = 200 hours × ₦300 | 60,000 A |
| Total cost variances | 1,060,000 A |
Operating statement: standard absorption costing
An operating statement is a management report that reconciles budgeted profit with actual profit by listing the sales variances and the cost variances. It reports all variances so that management can assess their effect on profit, and senior managers can judge how well junior managers controlled costs and achieved sales. Under standard absorption costing it is set out as follows.
- Begin with the budgeted profit.
- Add favourable and deduct adverse sales variances. The subtotal is actual sales revenue minus the standard production cost of the actual sales.
- List the cost variances, in separate favourable and adverse columns, and total them.
- Finish with the actual profit.
| ₦ | Favourable | Adverse | ₦ |
|---|---|---|---|
| Budgeted profit | 6,000,000 | ||
| Sales price variance | (460,000) | ||
| Sales volume variance | (480,000) | (940,000) | |
| Standard profit on actual sales | 5,060,000 | ||
| Materials price | 190,000 | ||
| Materials usage | 240,000 | ||
| Labour rate | nil | ||
| Labour idle time | 60,000 | ||
| Labour efficiency | 120,000 | ||
| Variable overhead expenditure | 70,000 | ||
| Variable overhead efficiency | 40,000 | ||
| Fixed overhead expenditure | 100,000 | ||
| Fixed overhead capacity | 180,000 | ||
| Fixed overhead efficiency | 60,000 | ||
| Total cost variances | nil | 1,060,000 | (1,060,000) |
| Actual profit | 4,000,000 |
Check on actual profit. Actual revenue ₦22,540,000 less actual costs (materials ₦7,790,000 + labour ₦5,700,000 + variable overhead ₦1,950,000 + fixed overhead ₦3,100,000 = ₦18,540,000) = ₦4,000,000. ✓ Other overheads, such as administration and selling, are usually fixed, and their variance is the budget less actual spending.
Operating statement: standard marginal costing
Under marginal costing, stock and production are valued at standard variable production cost. The variable cost variances are the same. There are two differences: the sales volume variance uses standard contribution per unit, and there is no fixed overhead volume variance (only an expenditure variance). The statement reconciles budgeted contribution to actual contribution, then deducts actual fixed costs.
| ₦ | Favourable | Adverse | ₦ |
|---|---|---|---|
| Budgeted contribution (10,000 × ₦900) | 9,000,000 | ||
| Sales price variance | (460,000) | ||
| Sales volume variance (800 × ₦900) | (720,000) | (1,180,000) | |
| Standard contribution on actual sales | 7,820,000 | ||
| Materials price | 190,000 | ||
| Materials usage | 240,000 | ||
| Labour idle time | 60,000 | ||
| Labour efficiency | 120,000 | ||
| Variable overhead expenditure | 70,000 | ||
| Variable overhead efficiency | 40,000 | ||
| Total variable cost variances | 720,000 | (720,000) | |
| Actual contribution | 7,100,000 | ||
| Budgeted fixed overhead | (3,000,000) | ||
| Fixed overhead expenditure variance | (100,000) | ||
| Actual profit | 4,000,000 |
The profit is the same as in the absorption statement because production equalled sales, so there is no change in stock and no fixed overhead has been carried forward. Actual contribution check: revenue ₦22,540,000 − variable costs (₦7,790,000 + ₦5,700,000 + ₦1,950,000 = ₦15,440,000) = ₦7,100,000. ✓
When production differs from sales
If production had been 10,000 buckets and only 9,200 sold, closing stock would be 800 buckets. Under absorption costing, stock would be valued at ₦1,900 and carry ₦240,000 of fixed overhead (800 × ₦300), so absorption profit would exceed marginal profit by ₦240,000. The reconciliation rule from the earlier topic applies: change in stock in units × fixed overhead per unit.
The ideas in more depth
Reading an operating statement as a story
The statement above says: the budget promised ₦6.0m. A price cut and a volume shortfall removed ₦0.94m before any cost went wrong. Then production cost ₦1.06m more than it should have for the output achieved. The biggest items were fixed overhead capacity (₦180,000), materials usage (₦240,000) and materials price (₦190,000). Management will ask: why did the factory work only 9,400 hours against a planned 10,000?
Why was 600 kg of material wasted? Why was the price of materials above standard?
Why volume uses standard profit or contribution
A change in volume changes revenue and cost together. The part of revenue that is profit is the standard margin. Using the full selling price would overstate the effect, because costs would also have fallen. Under absorption costing the margin is the profit after fixed overhead recovery; under marginal costing, only the contribution is affected because fixed costs do not change.
Interpreting favourable and adverse sales variances
An adverse sales volume variance may not be bad if it comes from deliberately holding back to raise prices. A favourable sales price variance may be a warning if it came with a loss of customers. As with cost variances, the question is why.
Using the statement for responsibility accounting
Each variance should be assigned to the manager who controls it: sales variances to sales managers, material price to purchasing, material usage and labour efficiency to production, fixed overhead expenditure to budget holders. Reporting only the total hides who is responsible.
Worked example: a short operating statement
Scenario. Sokoto Sandals Ltd budgets to sell 5,000 pairs at a standard price of ₦3,000. The standard full cost is ₦2,400 a pair, of which ₦1,800 is variable. Actual sales were 5,400 pairs for ₦16,740,000. Cost variances for the period:
- materials ₦120,000 F
- labour ₦200,000 A
- variable overhead ₦50,000 F
- fixed overhead expenditure ₦70,000 A
- fixed overhead volume ₦240,000 F. Prepare the sales variances and operating statements under absorption and marginal costing
- Standard profit.
₦3,000 − ₦2,400 = ₦600.
Standard contribution = ₦3,000 − ₦1,800 = ₦1,200.
Budgeted profit = 5,000 × ₦600 = ₦3,000,000.
Budgeted fixed overhead = 5,000 × ₦600 = ₦3,000,000. - Sales price variance:
₦16,740,000 − (5,400 × ₦3,000 = ₦16,200,000) = ₦540,000 F. - Sales volume variance:
(5,400 − 5,000) = 400 F.
Absorption: 400 × ₦600 = ₦240,000 F.
Marginal: 400 × ₦1,200 = ₦480,000 F. - Absorption statement:
budgeted profit ₦3,000,000 + price ₦540,000 + volume ₦240,000 = ₦3,780,000.
Cost variances: +120,000 − 200,000 + 50,000 − 70,000 + 240,000 = +₦140,000 F.
Actual profit = ₦3,920,000. - Marginal statement:
budgeted contribution 5,000 × ₦1,200 = ₦6,000,000 + price ₦540,000 + volume ₦480,000 = ₦7,020,000.
Variable cost variances: +120,000 − 200,000 + 50,000 = −₦30,000.
Actual contribution = ₦6,990,000.
Fixed costs: ₦3,000,000 + ₦70,000 = ₦3,070,000.
Actual profit = ₦3,920,000. ✓
Why the two statements give the same profit here, and when they would not
In the examples above production equalled sales, so no fixed overhead was carried in stock. When stock changes, the two statements give different profit by exactly the change in stock × the standard fixed overhead per unit, just as in the reconciliation topic. Under standard absorption costing, the fixed overhead volume variance is then based on production, not sales. Suppose Sokoto Sandals produced 5,400 pairs but sold only 5,000.
The statements would show: absorption profit = marginal profit + (400 pairs × ₦600 = ₦240,000), because the 400 unsold pairs carry ₦240,000 of fixed overhead forward. The examiners may ask for either statement and then for a reconciliation, so practise both and the link.
Where sales variances fit in performance review
Sales variances belong to the sales and marketing function. A favourable price variance alongside a favourable volume variance suggests strong demand. An adverse price variance with an adverse volume variance suggests the market is weak or competitors are winning. A favourable price variance with an adverse volume variance suggests the firm raised prices and lost sales; whether this was wise depends on the contribution lost against the extra price.
For example, if the price rose by ₦100 on 5,000 units (₦500,000 F) but 600 units of volume were lost at ₦900 contribution each (₦540,000 A), the net effect is ₦40,000 adverse, so the price rise was not worth it.
Common mistakes in the exam
- Using budgeted units instead of actual units in the sales price variance.
- Valuing the sales volume variance at the standard selling price instead of the standard profit or contribution.
- Using standard profit in a marginal costing statement, or standard contribution in an absorption costing one.
- Including a fixed overhead volume variance in a marginal costing statement.
- Adding adverse variances to profit, or deducting favourable ones.
- Starting an absorption statement at budgeted contribution instead of budgeted profit.
- In the mix variance, using budgeted units instead of the actual total in the budgeted mix.
- Not checking the final profit against profit worked directly from actual figures.
Quick revision
- Sales price = actual revenue − actual units × standard price.
- Sales volume = (actual − budgeted units) × standard profit (absorption) or standard contribution (marginal).
- Quantity = (actual total − budgeted total) × weighted average contribution. Mix = actual in actual mix − actual in budgeted mix, at standard contribution. Quantity + mix = volume.
- Operating statement: budgeted profit (or contribution), sales variances, cost variances, actual profit.
- Marginal costing: no fixed overhead volume variance; fixed costs shown separately.
Practice questions
These are original questions written in the style of the Institute of Chartered Accountants of Nigeria (ICAN) exam. Try each one before you open the answer.
Section A style: multiple choice
Question 1. 900 units were sold for ₦17,100,000 and the standard price is ₦20,000. The sales price variance is:
- ₦900,000 adverse
- ₦900,000 favourable
- ₦2,900,000 adverse
- Nil
Show the answer
A. Standard ₦18,000,000 less actual ₦17,100,000 = ₦900,000 adverse.
Question 2. Budgeted sales 7,000 units, actual 7,200, standard profit ₦8 per unit. The sales volume variance (absorption costing) is:
- ₦1,600 favourable
- ₦1,600 adverse
- ₦57,600
- ₦56,000
Show the answer
A. 200 units × ₦8 = ₦1,600 favourable.
Question 3. Under marginal costing the sales volume variance is valued at:
- Standard profit per unit
- Standard contribution per unit
- Standard selling price
- Standard cost per unit
Show the answer
B. Fixed costs do not change with volume.
Question 4. Which variance does not exist under marginal costing?
- Fixed overhead volume
- Fixed overhead expenditure
- Sales price
- Materials usage
Show the answer
A. There is no absorption of fixed overhead.
Question 5. An absorption costing operating statement begins with:
- Actual profit
- Budgeted profit
- Budgeted contribution
- Total cost variances
Show the answer
B. It reconciles budgeted to actual profit.
Question 6. The weighted average standard contribution per unit is used to calculate the:
- Sales quantity variance
- Sales price variance
- Materials price variance
- Fixed overhead expenditure variance
Show the answer
A. Change in total units × average contribution.
Question 7. The total sales mix variance in units is always:
- Positive
- Negative
- Zero
- Equal to the quantity variance
Show the answer
C. The actual total is shared in the budgeted proportions.
Question 8. Selling at a lower price than standard to win more sales will typically give:
- Adverse price, favourable volume
- Favourable price, adverse volume
- Adverse price and adverse volume
- No variances
Show the answer
A. A price cut should raise volume.
Question 9. Budgeted profit ₦5,000,000. Sales price variance ₦200,000 F, sales volume variance ₦300,000 A, total cost variances ₦400,000 A. Actual profit is:
- ₦4,500,000
- ₦5,900,000
- ₦4,900,000
- ₦5,500,000
Show the answer
A. 5,000,000 + 200,000 − 300,000 − 400,000 = ₦4,500,000.
Question 10. Sales variances are:
- Recorded in the cost ledger
- Included in variance reports and operating statements
- Never reported
- The same as cost variances
Show the answer
B. They reconcile actual to budgeted profit.
Section B style: written questions
Question 11 (10 marks). Explain the sales price and sales volume variances and the purpose of an operating statement. State why the sales volume variance is valued differently under marginal and absorption costing.
Question 12 (20 marks). Okene Mats Ltd budgets to sell 2,000 mats at a standard price of ₦8,000. Standard full production cost per mat is ₦6,500, of which ₦5,000 is variable. Actual sales were 1,800 mats for ₦14,670,000. Cost variances for the period: materials ₦150,000 A; labour ₦90,000 F; variable overhead ₦40,000 A; fixed overhead expenditure ₦60,000 A; fixed overhead volume ₦300,000 A. There is no stock change.
(a) Calculate the sales price and sales volume variances (absorption costing). (6 marks)
(b) Prepare an operating statement under standard absorption costing. (6 marks)
(c) Prepare an operating statement under standard marginal costing. (6 marks)
(d) Explain why actual profit is the same in both statements. (2 marks)
A further written question
Question 13 (10 marks). A firm budgets to sell 400 of Product A, 300 of B and 300 of C, with standard contributions of ₦50, ₦80 and ₦120. Actual sales were 500 A, 250 B and 450 C. (a) Calculate the sales quantity variance. (3 marks) (b) Calculate the sales mix variance. (5 marks) (c) State the total sales volume variance and explain it. (2 marks)
Model answers
Show the model answer to Question 11
The sales price variance is the actual revenue less actual units sold at the standard price. It is favourable if prices were above standard. The sales volume variance shows the effect on profit of selling a different quantity from the budget. It is the difference between actual and budgeted units multiplied by the standard profit per unit under absorption costing, or by the standard contribution per unit under marginal costing.
It is favourable when more units are sold. An operating statement reconciles budgeted profit with actual profit by listing the sales variances and cost variances, so that management can assess the effect of each on profitability, and judge managers’ control of costs and sales.
The valuation differs because under absorption costing, a unit’s profit is its price less full cost, including fixed overhead absorbed; under marginal costing, fixed costs do not change with volume, so only the contribution (price less variable cost) is affected by the change in units.
Show the model answer to Question 12
(a)
- Standard profit.
₦8,000 − ₦6,500 = ₦1,500. - Price: ₦14,670,000 − (1,800 × ₦8,000 = ₦14,400,000) = ₦270,000 F.
- Volume: (1,800 − 2,000) = 200 A × ₦1,500 = ₦300,000 A.
(b) Absorption.
- Budgeted profit 2,000 × ₦1,500 = ₦3,000,000.
- Sales price +₦270,000.
- Sales volume −₦300,000.
- Standard profit on actual sales ₦2,970,000.
- Cost variances: materials −150,000; labour +90,000; variable overhead −40,000; fixed overhead expenditure −60,000; fixed overhead volume −300,000; total −₦460,000.
- Actual profit = ₦2,510,000.
(c) Marginal.
- Standard contribution.
₦8,000 − ₦5,000 = ₦3,000. - Budgeted contribution = ₦6,000,000.
- Sales price +₦270,000.
- Sales volume 200 × ₦3,000 = −₦600,000.
- Variable cost variances.
materials −150,000, labour +90,000, variable overhead −40,000 = −₦100,000. - Actual contribution = ₦5,570,000. Fixed costs: budgeted ₦3,000,000 (2,000 × ₦1,500) plus expenditure variance ₦60,000 = ₦3,060,000.
- Actual profit = ₦2,510,000.
(d) Production equalled sales, so there is no change in stock. No fixed overhead is carried forward in stock, so absorption and marginal costing charge the same fixed overhead to the period. (Under absorption costing the ₦300,000 volume variance and the sales volume difference account for what marginal costing treats as the loss of contribution on 200 units.)
Show the model answer to Question 13
Budgeted contribution = 400 × 50 + 300 × 80 + 300 × 120 = ₦80,000. Weighted average = ₦80,000 ÷ 1,000 = ₦80.
(a) Quantity: (1,200 − 1,000) = 200 units F × ₦80 = ₦16,000 F.
(b) Mix:
- budgeted mix applied to 1,200: A 480, B 360, C 360.
- A: (500 − 480) = 20 F × ₦50 = ₦1,000 F.
- B: (250 − 360) = 110 A × ₦80 = ₦8,800 A.
- C: (450 − 360) = 90 F × ₦120 = ₦10,800 F.
- Mix = ₦3,000 F.
(c)
- Total volume variance.
₦16,000 + ₦3,000 = ₦19,000 F. - Actual sales at standard contribution were ₦99,000 against a budget of ₦80,000.
- More units were sold in total (favourable quantity), and the sales were weighted towards the high-contribution product C (favourable mix), though B was under-sold.
Pathfinder on Sales variances and profit reconciliation
These are the ICAN Pathfinder questions that test this topic. ICAN owns the questions and the suggested solutions, so we point you to them and do not copy them. Open your Pathfinder, attempt each question under exam conditions, then check your answer against the notes above.
A standard costing question for one product, with a standard selling price of ₦5,000, asking for variances and a reconciliation of budgeted to actual profit.
Revise first: Operating statement: standard absorption costing
A standard cost for a household item with materials and labour, asking for variances and the effect on profit.
Revise first: The cost variances for the company
Multiple-choice items can test the sales price variance, the sales volume variance, and the difference between marginal and absorption statements. Check Section A of every diet you practise.
Revise first: Sales price variance
Source: ICAN Pathfinder, Management Accounting. Diets covered: November Diet, 2025 and May Diet, 2026. May Diet, 2025 and November Diet, 2024 are not covered here.
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